Data from the Ministry of Economy and Finance: an image of the virtuous system Italy
The Ministry of Economy and Finance (MEF) Italian opened on its website www.tesoro.it a section entitled #prideandprejudice dedicated to positive indicators but little-known Italian public finances and the overall strength of the domestic financial system. The goal of this initiative is to counter the tendency to put in the foreground only negative indicators (such as the public debt or the low competitiveness), turning the spotlight on the positive indicators concerning Italy, “of which we never hear »: the primary surplus, the deficit-GDP, the dynamics of public debt, the risk of sustainability and contributions to the bailout funds.
All this to be able to represent Italy for what it is: one of the leading countries of the developed world, according to the manufacturing output in Europe, the third largest economy in the euro zone. A country that, in the last twenty years has been able to keep their accounts under control ranking among the best performing in Europe and the world.
The MEF document illustrates, with facts and figures, the changes taking place in the fiscal accounts. The aim of this is to combat prejudice and to represent adequately one of the countries that helped found the European Union.
According to spread by the Ministry of Economy and Finance, through the dissemination of economic data, of which we never hear, or not enough, you can “adequately represent a country that helped found the European Union”.
The first data offered by the MEF to combat prejudice concerns the time series of the primary surplus (the nominal budget balance net of interest payments on public debt) of the last twenty years, from 1995 to 2014. During this period, Italy recorded a budget surplus for 19 years out of 20, while the other major European economies have recorded a deficit at least 7 times. In 2013 the primary surplus as a percentage of GDP is the second highest, behind only Germany (0.16 percentage points) and equal to twice Austria, which ranks third in this ranking of countries virtuous
“Italy has recorded a deficit / GDP ratio below 3% in 2013, as in 2012” – these are the words contained in the document released by the MEF. “Therefore the European Commission sanctioned the closure of the infringement procedure for excessive deficit opened in the past. According to current projections, even in 2014 the Italian public finances are in compliance with this requirement, provided by the European treaties for countries that have joined the monetary union and then adopted the euro as their currency. In comparison with the Euro zone, it is clear that Italy is one of the few countries that respect this rule. It is also interesting to note that among the countries outside the euro, there are many who have a deficit / GDP ratio above this threshold. These include the United Kingdom, Japan, and the United States. ”
Another indicator that was used in the document of the MEF is the percentage change in the ratio of government debt to GDP occurred between 2008 (the beginning of the crisis) and 2014, according to sources Ameco and the European Commission. Since the beginning of the economic crisis, the Italian public debt has grown at a slower rate (29.1%) than either the United States (44.3%) than to other EU countries. Specifically, the best result it does record Sweden (9.8%), followed by Belgium (14.8%) and Germany (14.8%). Before Italy there are Austria (26.9%) and the Netherlands (27.4%). Below Italy there are Denmark (32.1%) and France (40.8%). The figures rise considerably as to other European countries: Greece (60.5%), the UK (72.6%), Portugal (78.2%), Spain (149.0%) and Ireland (159.4%).
The dynamics of the debt in absolute terms is not necessarily indicative of debt sustainability: the ratio of debt to GDP is definitely a more reliable indicator in this sense. However, the dynamics of debt in Italy is conditioned by low growth and not by the relationship between spending and revenue, as demonstrated in the primary series already published. Moreover, in recent years the contributions to the funds “bailout” and the payment of arrears of public administrations have contributed significantly to the increase in debt in monetary terms.
From the data released by the MEF indicates that: “a higher nominal growth (composed of inflation and real growth) would have allowed putting debt dynamics on a declining path. With the expected growth and the planned sale of state property already being implemented, in 2016 the debt / GDP ratio will start to decline. ”
The European Commission’s analysis on the sustainability of the economies of the countries participating in the euro recognizes Italy a risk, both in the short and in the medium, which in the long run, always below the average of the 18 countries of the euro and of the 27 members of the European Union. For sustainability risk means the gap between the structural budgetary position and a sustainable fiscal position. According to the Commission’s analysis of the Italian public debt is among the most sustainable in the long term in Europe. The index S2 (long term), in fact, amounts to -2.1 compared to an EU average of three and a euro area average of 2.3. A negative index S2, as in Italian, indicates the sustainability of public finances in a given scenario without further adjustments. Even the sustainability indicators of short and medium term damage Italy among the most sustainable.
Together with Italy, with a low risk of long-term sustainability are Estonia, Latvia, Bulgaria, Hungary, Denmark, Germany and France. Other countries, however, as the United Kingdom, Belgium, the Netherlands, Finland and Slovenia have a high risk in the long run. In the middle are Spain, Austria, Czech Republic, Poland, Lithuania, Romania and Sweden.
The Ministry of Economy and Finance has revealed that Italy is in bottom of the ranking in Europe for public aid to banks, with only 4 billion euro compared to 240 in Germany in 2007-2013. Often, in fact, we think that Italy has received aid from the European Union during the years of economic crisis. “But Italy is the third largest contributor to aid paid to euro area countries in difficulty and the European financial instruments created during the economic crisis (the so-called” bailout funds “EFSF and ESM), used to provide financial assistance to Cyprus, Greece, Portugal and Ireland. ”
Data from the Bank of Italy show that our country has contributed 2012-2014 with a share of 18.5%, for a value of € 60 billion, which contributed to the increase of the Italian public debt. “The Eurostat figures show that in the period of economic crisis (2007-2013) the national banking and financial systems of 17 countries in the euro have received aid from national governments with very different amounts. Italian banks have received support from the government for about 4 billion euro, compared to 250 billion euro received by those in Germany and 165 billion from the British. The total amount of aid in the European Union, calculated by Eurostat, amounted to 688.2 billion. Of these, 517 900 billion have been granted in the countries of the euro area. The Italian intervention therefore corresponds to a little less than 1% of state aid granted to banks in the euro area. And 75% of this support has been returned by the recipients to the public purse. ”
“Italy has shown, finally returns the document of the MEF, to excel in many fields, from the famous” three A’s “(food, clothing, furniture) to the mechanical production but also in civil engineering and scientific research. He recorded moments of impetuous economic development, during which the wealth was widely redistributed, with the result of improving the quality of life of millions of citizens. But he also wasted many opportunities to improve their competitiveness and to modernize public administration. The most obvious manifestation of these missed opportunities is the high level of public debt. The national community has responded to this massive burden with heavy sacrifices, of which there is evidence in the long series of public budgets closed primary surplus. The Italian government has pledged to modernize and renew the country to reward these joint efforts through a challenging program of reforms which quickly and with determination. To dismount the facts ancient and widespread prejudices of a nation that wants to talk about itself with deserved pride”.